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- Investing
By Andrew Leckey
Smart investment calls aren't so easy to come by.
They require insight, patience and a bit of luck. Once they pan out, however, they are fondly remembered for a long time.
Some bold calls made during the market plummet of 2008 proved highly successful and an examination of the logic behind them can be helpful for the future.
Perhaps the most dramatic call made the past 20 years in the career of Arthur Hogan, director of global equity products for Boston-based
"I really stuck my neck out in November 2008 and said the market was going to bottom out because so much carnage had taken place in such a short amount of time," recalls Hogan of his call that encouraged investing and reaped rewards the following spring. "I made that call because I saw we really needed some sanity to come back into the market."
A lesson throughout history is that "you need to be greedy when people are panicking and panic when people are being greedy," Hogan explained. Too many investors last year lost sight of the fact that companies would still be in business in another year. Panic provided buying opportunities.
"The market was a nerve-wracking mess in December 2008, but one of the stocks we picked then was the North American railroad
In economic recovery, there's nothing more basic than railroads, he reasoned, since when business picks up there's always greater need to move products cross-country. In tune with that logic,
"A year ago, I made the decision to overweight high-yield bond funds because I had a lot of income-sensitive clients who can tolerate some risk, and during that flight to safety you got a 9 percent yield if you assumed some risk," said Andrew Fitzpatrick, director of investments for
Some clients were unwilling to take on such uncertainty because the common logic was to stay firmly entrenched in Treasurys offering zero risk but a miniscule yield. It is worth noting that his clients willing to go with the high-yield (non-investment-grade and lower-quality) bonds were mostly retired or close to retirement and already held diversified portfolios.
Lest you think those pros are infallible, realize that they too make mistakes and are willing to acknowledge them. Maybe it helps to get it off their chest.
"My wife told me on three separate occasions to buy
It was the worst call he had ever made and "my wife is more than willing to bring up the fact that I made that call at each and every cocktail party and family event we ever attend," he sighed. Maybe next time he'll listen.
"In 2009, we recommended
When the market did pick up,
Never overlook the obvious.
"In 1996, I was working at a bank starting my career when I noticed that the
Not yet learning his lesson, Fitzpatrick missed out again last year when he could have bought
Every investment professional always has another call to make, so here are a couple of current recommendations:
Automatic Data Processing (ADP), which does bread-and-butter tech work for companies such as payrolls, is a well-managed company that should excel once unemployment levels start to improve, Wright expects.
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© Andrew Leckey
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